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April 06, 2005

Social Security Revisted

TWC has attacked social security any number of times on purely pragmatic and economic grounds. It's a Ponzi scheme that's obligated for more than the entire wealth of the country. Same. Same.

But how about the moral aspects? Aside from the obvious in that the government takes 15% of your salary without your permission, then gives it to someone else, and leaves you with a vague assurance that someday you'll get yours, there is the ownership issue.

Rossputin.com has a copy of the March 25, 2005 memo from Ed Crane, President of Cato Institute, to Karl Rove nicely summing up the steps GWB should take if he expects to save social security reform. In it Crane reminds all of us that we have no legal right to collect social security. None.

You want to get people excited about personal accounts? Tell them about the 1960 Supreme Court case, Flemming v. Nestor, which explicitly says Americans have no ownership rights to the money they pay into Social Security. It is, the Court ruled, a social program of Congress with absolutely no contractual obligations. What you get back at retirement -- indeed, when you can retire and receive benefits -- is entirely up to the 535 members of Congress.

Imagine how many folks would line up to buy life insurance under those terms.

Of course one of the big arguments against reform is the "risky scheme" argument that arrives on a D-10 Cat every time reform comes up.

The investment-risk argument was used in 1983 when the Greenspan Commission refused to even consider personal accounts. Yet, the DJIA is now ten times higher than it was at the peak in 1983 (adjusting for inflation and including dividends).

Never doubt for a moment that the people who insist on forcing you to participate in the social security scheme are elitists who are smugly confident that they are better able to plan your future than you are.

Finally, with regard to the 'risky scheme' arguments of opponents, I think it is ironic that the very same people who appear so concerned over the growing wealth gap in America are the one's who refuse to allow low and moderate-income Americans to accumulate wealth.